As predicted by Kara Swisher in AllThingsDigital this morning, yt’s just been announced that Microsoft has replaced Kevin Johnson with Qi Lu and that Brian McAndrews is leaving. It’s also been announced there is shuffling underneath, which on the surface the most interesting looks to be the Global Advertising Sales and Services organization moving into a more centralised position.

On initial thoughts, AdViking thinks that in choosing Dr. Qi Lu, Steve Ballmer has made an inspired choice. I mean, the general chatter was about a business/market guy was going to get the job and then they appoint a well regarded Search-technologist (20 patents, etc.). So in terms of Microsoft culture, this guy is going to walk in and the Office and Windows teams are going to be giving him props.

Now if you mash that up against the FAST and Powerset acquisitions, the European Search Center, etc. it’s great to see the effort that is being made to try and take the game to Google.

Generally response looks to be positive but Henry Blodget at Silicon Alley Insider provides a good outline on the width of the group that Qi Lu is inheriting and therefore highlights some of the issues.

Here’s the full Press Release:

Microsoft Appoints Dr. Qi Lu to Run Online Services Group

REDMOND, Wash. — Dec. 4, 2008 — Microsoft Corp. today announced that Dr. Qi Lu will join the company as president of the Online Services Group. Dr. Lu will lead Microsoft’s efforts in search and online advertising and all the company’s online information and communications services. Dr. Lu will report to Microsoft Chief Executive Officer Steve Ballmer.

Lu most recently served as executive vice president of Engineering for the Search and Advertising Technology Group at Yahoo!, where he was responsible for development efforts around Yahoo!’s Web search and monetization platforms. Dr. Lu left Yahoo! in August 2008 after 10 years of service.

Dr. Qi Lu will join Microsoft as president of the Online Services Group effective Jan. 5, 2009.

“I am genuinely excited about the opportunities ahead for Microsoft to make an enormous impact on the online industry,” Dr. Lu said. “Microsoft has built a great foundation for its search and advertising technologies and put an amazing team of researchers and engineers in place to drive the next wave of innovation in online services. I’m looking forward to working with them to help transform the way people and businesses use the Internet to find and share information.”

Before his most recent role at Yahoo!, Lu was vice president of engineering responsible for the technology development of Yahoo!’s Search and Marketplace business unit, which includes the company’s search, e-commerce, and local listings of businesses and products.

Before joining Yahoo! in 1998, Dr. Lu was a Research Staff Member at IBM Almaden Research Center. Before IBM, Dr. Lu worked at Carnegie Mellon University as a Research Associate, and at Fudan University in China as a faculty member. Dr. Lu holds 20 U.S. patents, and received his bachelor of science and master of science in computer science from Fudan University and his Ph.D. in computer science from Carnegie Mellon University.

Lu’s first day at Microsoft will be Jan. 5, 2009. In his role running the Online Services Group, he will oversee several groups including the Advertiser & Publisher Solutions business, managed by Scott Howe who was promoted to corporate vice president; the Online Audience business, managed by Senior Vice President Yusuf Mehdi; OSG Research & Development, managed by Senior Vice President Satya Nadella; and OSG Finance, managed by Rik van der Kooi who was promoted to corporate vice president.

With the successful integration of aQuantive now complete, Brian McAndrews, former CEO of aQuantive and senior vice president of Microsoft’s Advertiser & Publisher Solutions Group, has decided to transition out of Microsoft, and will do so over the next several months, serving in a consultative capacity to Steve Ballmer and Qi Lu during that time.

“Brian McAndrews built a world-class business for advertisers and publishers and led the successful integration of aQuantive into Microsoft, setting the foundation for our next phase of growth,” Ballmer said. “While I am sorry to see Brian leave the company, I respect and understand his decision and wish him nothing but the best in the future.”

“I also want to congratulate Scott and Rik on their well-deserved promotions and look forward to their leadership in the Online Services Group alongside Qi, Yusuf and Satya,” Ballmer said.

As part of today’s announcement, several teams will move to further align resources. The field sales organizations in the Online Services Group will move to Microsoft’s centralized Sales, Marketing and Services Group led by chief operating officer Kevin Turner. This group, called Consumer & Online, will be led by Corporate Vice President Darren Huston and will include the Global Advertising Sales and Services organization, led by vice president Bill Shaughnessy.

Also, though it doesn’t say much more than the PR you can read the Steve Ballmer internal announcement that was leaked on TechCrunch.

Disclosure: Some of AdViking is employed by FAST and Microsoft. More details on About.

Highfield has left Kangaroo, a Hulu-type clone JV from a BBC-ITV-Channel 4 alliance to head this post.

AdViking thinks it’s pretty cool as by being responsible for the UK sales, marketing, content and programming, business development, partner efforts and operations for Windows, Windows Mobile, Windows Live, MSN, Live Search and Microsoft Advertising he is uniquely positioned to realise some of his dreams set out in the early days at Flextech (I’ll try to dig out some of the deep web examples of this.

One question mark that comes to mind is does Highfield have the background to not lead a full frontal assault against Google but instead be eco-system centric and surround the big G? That is are we going to find a balanced approach to the market or is it going to be Owned and Operated at the expense of Publisher relationships?

So, the mega ‘deal’ that Yahoo! struck with Google to get Microsoft off its back has backfired, or if not backfired, at least ‘back-burnered’. Adviking is not one to miss a chance to get on a soapbox, however before we crack open the bubbly and mull over anti-trust issues of market dominance… we can’t help but feel, regardless of press releases and articles to the contrary, that it leaves Yahoo! on the sidelines and Google smirking at the flimsiness of the competition.

Will Microsoft return to the table? They envy the Yahoo! search traffic for sure, but as Social Media starts to gain more leverage and prominence, will Yahoo! properties lose their lustre somewhat? Their mail app is generally considered to be class-leading (much to Google’s chagrin), but what else have they got?

We can’t help but feel that this will be the case… Google got the Yahoogle out of there and has abandoned ‘Junior’ and, for all the credibility Jerry Yang has left, it can only be a matter of time before there are more movements in this space.

It may appear at times that the AdViking crew are a bit all over the map in terms what we blog about and what we champion – direct response, conversational marketing, ppc, branding, display, search, etc. All I can say is this is healthy – debate and dialog is a good thing, I don’t need to defend it.

This past week Microsoft continued its solid defense of the value of display advertising with a renewed push. How? Well Microsoft’s Young-Bean Song (a guru of online advertising analytics) began a speech at the MIXX conference in New York earlier in the week with a beer analogy (more here at wp)… We like beer analogies. Anyway, he talks about Corona, but we can substitute this for Guinness or Stella or Heineken, saying if they could measure that last interaction a consumer has with that brand before they buy beer well then they might “put all its marketing budget into neon signs at pubs.” Or t-shirts. We all know that this would be stupid. We know advertising works in a more holistic and less black & white way.

old school - last click wins

For example on your way to a pub you may see a sign for Guiness on the bus and you may remeber a great Guiness TV ad. And then you’ll think ahh I am going to an Irish pub so why don’t I order Guiness. You get the idea.

Well a lot of online advertising (especially paid search or CPC based models) works by just giving credit to the ‘last click’ and thus we (advertisers and marketers) are ignoring all the other touch points when calculating the overall ROI (return on investment) of our online marketing mix.

Instead, in a nutshell, what Microsoft Advertising is saying is that advertisers should be smarter than that and look all the data they can when analysing online ad spend. Based on some studies that Microsoft has done using real data – advertisers can be ignoring as much at 94% of the online data points and only looking at 6% of the data when calculating ROI. That sounds like a step backwards to me!

new school - engagement based ROI

Microsoft Advertising have developed an entire reporting standard to help advertisers called Engagement Mapping. Check it out.

This week has seen the Vista ad with Jerry Sienfeld and Bill Gates hit the airwaves.

There’s been a bit of debate about how Microsoft got the confirmed Mac extremist Sienfeld to appear ($10 million probably helps) but AdViking thinks that The Silicon Apartment is probably closest to the mark.

The ad follows the Mojave Experiment where people thought they were testing the next OS from Microsoft where in fact it was just Vista.

These campaigns are the first coming out of Crispin Porter + Bogusky, the agency that was hired to make Microsoft hip. Again, you can find plenty of negative coverage of the ads and AdViking isn’t quite sure what to make of it all, is it really suble and CP+B are geniuses or is all just really really bad advertiing. Current thinking is:

Forget really if they are good or not, the reality is that people are talking about Microsoft ads, so that’s got to be good…especially if you think the typcial chats are going:

What is Chrome going to bring us that Firefox couldn’t, Safari could’ve and Explorer should’ve… ? Very little we expect…

Not content with it’s toolbar taking over the browser population, Google feels it must flex its muscles further and we have little doubt that it will quickly overtake Safari (one month), Firefox (one year) and perhaps eventually Explorer (5 years??) – but what for?

We suggest it will be a trojan horse (but not of the virus-carrying variety) to market and distribute all Google’s ‘Cloud’ services in it’s own managed environment…

I can hear the sound web designers and developers everywhere weeping into their Vanilla Lattes as they cope with yet another browser to deal with. I am sure Google will say that it’s compliant and the most accurate etc. etc. however the reality is that it will add further idiosyncracies and complexity to the design process.

So – our friends over at Microsoft have gone a splurged nearly half a billion on Ciao. Well, OK, not just Ciao – they bought the site’s owners, marketing research firm Greenfield Online apparant just so they could grab Ciao. Wow.

But they do Ciao a disservice: the magic lies in combining price comparison with product reviews from (gasp) real people, adding (for AdViking at least) some real value other than just hogging the search results on Google. Is that, AdViking wonders, where Microsoft see the value?

There are some other players around in this industry (ReviewCentre springs to mind) who must be raising an eyebrow or two. Good luck to them!